June 01, 2017

Brazil’s Efforts to Improve Fiscal Transparency


Posted by Paulo Medas [1]

An increasing number of countries have done an assessment of their fiscal transparency practices against the principles in the IMF’s Code of Fiscal Transparency. Brazil did so in 2016, amidst ongoing efforts to upgrade transparency. The IMF just published the results.

According to the IMF, Brazil’s practices meet many of the principles of the Fiscal Transparency Code at good or advanced levels. Brazil has made significant progress over recent decades in providing regular information on the budget and its implementation at all levels of government. For example, fiscal statistics encompass the general government sector and recognize most of the government’s assets and liabilities. Fiscal reports are published frequently and annual financial statements are audited. The institutional scope of budget documentation is comprehensive and extensive budgetary information is made available to the general public. Since 2010 a Citizens Budget has been  published which provides core information in a non-technical manner. Brazil is also a leading country in providing citizens with a formal voice in budget deliberations. Elected representatives of National Councils and committees and representatives of civil society can contribute to the planning and budget processes, including through participation in public hearings.

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May 11, 2017

Practical Ideas for Challenging Environments – ‘PFM Introductory Guides’


Posted by Bryn Welham, Sierd Hadley, and Mark Miller[1]

Cliquez  ici pour lire en français

The Overseas Development Institute (ODI), with funding from Sida, have recently published a series of ‘PFM Introductory Guides’ aimed at helping government officials, and their supporters, who work in low-capability environments. These documents (available in English and French) provide a summary of the key issues and some modest options for reform specifically aimed at challenging contexts. The Guides cover: (i) fiscal decentralisation; (ii) cash management; (iii) capital investment management; (iv) the strategic phase of the budget; and (v) the finance ministry challenge function. They are based on a review of the wide-ranging literature on these topics, supplemented by the first-hand experience of ODI and Budget Strengthening Initiative (BSI) staff who work on these issues.

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April 22, 2016

Two New Technical Notes and Manuals

Tnm1 Tnm2

Posted by Sailendra Pattanayak and Sandeep Saxena[1]

The IMF published this week two new papers in its series of Technical Notes and Manuals (TNMs).

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January 06, 2016

PFM Bible Reaches the Masses!


Posted by Holger van Eden [1]

A paperback version of The International Handbook of Public Financial Management, edited by Richard Allen, Richard Hemming and Barry H. Potter, has just been released by Palgrave Macmillan. The book may be purchased on line through Amazon and other distributors at a much reduced price compared to the hardback version, which was published in 2013. A review of the volume by Philip Joyce and Juan Pablo Martinez Guzman in the PFM Blog (November 6, 2013) noted that :

The International Handbook of Public Financial Management is a must-have resource for many varied audiences. From a practitioner perspective, both development professionals and government officials will find a wealth of ideas and good practices discussed in the pages of this volume. Moreover, faculty teaching courses in financial management who wish to look at traditional PFM from an international perspective, will find no better resource than this book. Given that the pace of PFM reform is notoriously slow, this book should serve as a useful resource for years, perhaps decades, to come. The authors and editors have thus done a great service to the field.”

The International Handbook of Public Financial Management
Edited by Richard Allen, Richard Hemming, Barry Potter
ISBN: 9781137574893
December 2015
Palgrave Macmillan

[1]Holger van Eden is a Deputy Division Chief in the Public Financial Management II Division in the IMF's Fiscal Affairs Department and editor of the PFM Blog.

Note: The posts on the IMF PFM Blog should not be reported as representing the views of the IMF. The views expressed are those of the authors and do not necessarily represent those of the IMF or IMF policy.


December 14, 2015

Ups and Downs of PFM Reform in Ethiopia: Book Review


Posted by Richard Allen[1]

Between 1996 and 2008, Ethiopia undertook a comprehensive reform of its core financial systems, and successfully transformed itself in to one of the fastest growing economies in Africa. Since then, according to a recently published book[2] by Stephen B. Peterson, reforms have stood still or even moved backwards. Peterson provides a valuable case study of a reform experiment in which—as a USAID consultant working for the government on the Decentralization Support Activity (DSA) project—he was intimately involved.

The book has many important things to say, especially about the huge institutional challenges of reform in developing countries. A key finding is that reforms take a long time, at least 12-15 years, and basic systems (of what Peterson calls “public financial administration”, PFA) must be introduced before moving on to more sophisticated systems. But the volume also contains some serious flaws.

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November 18, 2015

IDB and IMF Launch a New Book on PFM Reforms in Latin America

Pages from Public Financial Management in Latin America_ The Key to Efficiency and Transparency,Gestion financiera publica en America

Posted by Carlos Pimenta and Mario Pessoa[1] 

The International Monetary Fund (IMF) and the Inter-American Development Bank (IDB) launched today the English version of the book “Public Financial Management in Latin America: the key to Efficiency and Transparency”. The volume, which was edited by Carlos Pimenta and Mario Pessoa, is a joint work based on extensive technical assistance provided by both institutions. 

The areas covered in the book include treasury single accounts, performance indicators for treasury management, financial management information systems, accrual accounting, cash and debt management, public procurement, and cost accounting. These topics were selected to bridge the gap in the literature about the results achieved in the region. 

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September 18, 2015

A Think Tank Amidst The Vast Blue Sea



Posted by Suhas Joshi, Benoit Wiest and Ali Abdul-Raheem[1]

The small island nation of Maldives was absolutely buzzing this July, as it celebrated its 50th year of independence, amid the bright lights, festive decorations, fireworks, parades and processions. The country’s transformation over the past half a century has been tremendous. From an economic backwater the country has become South Asia’s richest economy, with a per-capita income of US$ 8,625 in 2014. Growth has been driven by the Maldives’ now world-renowned tourism industry. Yet the country has experienced its fair share of development challenges: vast income inequalities, a chaotic political transformation, macroeconomic mismanagement, and the threat posed by climate change and rising sea levels, among others.

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August 24, 2015

Book Review - PFM Reforms in Latin America


Posted by Carlos Pimenta [1] and Mario Pessoa [2]

 Over the last two decades, almost all countries in Latin America have conducted substantive reforms to strengthen their public financial management (PFM) systems and generate reliable information in an effort to promote fiscal stability and sustainable development. These reforms have enhanced the quality of macro-fiscal management in the region and improved economic performance observed throughout the 2000s. As the recent economic crisis demonstrated, however, there is room for further improvement, as well as a need to increase the resilience of the PFM systems.

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July 27, 2015

Improving International Capacity Development: Bright Spots

Bright spots

Posted by Chris Iles[1]

 For many years, Dr. Jim Armstrong has been at the forefront in challenging the commonly held view that “international best practices” provide an effective solution to capacity development in developing countries.  He has been particularly concerned that many projects aimed at reforming public administration in poor countries fall short of their objectives, fail to sustain benefits after the project is complete and, by passively importing foreign practices, prevent the development of indigenous solutions. 

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June 29, 2015

A Very Short Introduction to Accounting

Posted by Tim Irwin[1]


Christopher Nobes’s Accounting: A Very Short Introduction (Oxford University Press, 2014) is about private not public financial management, but it may be of interest to people working on PFM.

For one thing, there are many similarities in the accounting problems faced by firms and governments, even if there are also crucial differences in their objectives, their functions, and their influence on the economies in which they are located. Moreover, Nobes offers a succinct and persuasive explanation of why private-sector accounting developed as it did, in response to the changing needs of businesses and their investors (e.g., why accounts payable and receivable were shown on balance sheets before cash and inventory). That explanation may prompt thoughts about how government accounting should develop.

For another, Nobes’s comments on the rise of International Financial Reporting Standards (IFRS) suggest interesting parallels with the development of International Public Sector Accounting Standards. He writes (pp. 75–76),

  • The UK’s joining the EU was “the main spur to the setting up by accountants of the IASC [International Accounting Standards Committee, the forerunner of the IASB, or International Accounting Standards Board] to try to keep accounting out of the control of governments.”
  • “The EU had always been opposed to the IASC, as a Trojan horse of Anglo-American accounting, but eventually it accepted IFRS as the only practical way of getting harmonized standards for EU capital markets.”
  • “The inability of governments in Roman law countries (e.g. France) to give up control of accounting has led to constant attempts at interference from the EU in the operations of the IASB.”

Nobes also presents interesting data on the number of members of each of several national accounting bodies (pp. 5–6). The chart above expresses these numbers as percentages of each country’s population in 2013, rounded to the nearest decimal point. Nobes notes that international comparisons are “fraught with difficulties” (p. 7) and that there are accountants who are not members of accounting bodies. Nevertheless, the differences are striking. If they reflect differences in the influence of accountants in each country, they may help explain why the Australian and New Zealand governments were among the first to adopt private-sector-like accounting, while the German government has shown little interest in doing so.

[1] Senior Economist, PFM1 Division, Fiscal Affairs Department, IMF 

 Note: The posts on the IMF PFM Blog should not be reported as representing the views of the IMF. The views expressed are those of the authors and do not necessarily represent those of the IMF or IMF policy.

April 17, 2015

Public Ownership of Commercial Assets—A Quarter Century Phony War


Posted by Dag Detter and Stefan Fölster1

For more than a quarter of a century there has been a phony war raging between those in favour of public ownership of commercial assets and those against: privatisation versus nationalisation. This polarised and binary debate has missed the point. What matters is not so much who owns the assets but the quality of asset management

For any ownership mode, be it private, public, mutual or cooperative, there is a very wide range of alternative management models/styles and the choices made from those alternatives will have a major impact on the value the asset delivers. Huge portfolios remain in government hands, including not only corporations but also vast swathes of real estate. In some cases, privatisation will make sense. In many others, it may be neither desirable nor feasible. The good news is that there are ways to sweat assets that remain in public hands, generating a higher rate of return on them—if governments follow a few sensible rules. 

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February 18, 2015

GDP: A Brief but Affectionate History


Posted by Chris Iles[1]

Diane Coyle’s recent book[2] has been on my reading list for some time, making it to the top of the pile over the Christmas break. Working at the IMF, and even just taking an interest in the Business and Economy pages of the media, the notion of GDP looms large. We take the concept of GDP for granted, but I have never been entirely comfortable with the way GDP figures are bandied about to compare the economic performance of disparate societies or to justify this or that unpopular policy; a good historical perspective on where it comes from and what it means seems like just the thing to assuage these misgivings.

Ms. Coyle gets down to business right from the first lines in her introduction. She opens with the still-topical challenges faced by the head of the Greek statistical agency (an ex-IMF staffer) in 2010 to highlight the significance of GDP in modern politics and finance, also acknowledging the various conceptual challenges that it faces.

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January 30, 2015

Angels and Demons – the Political Economy of PFM Reform

 Angels and Demons
Posted by Richard Allen1

In a thought-provoking presentation during the IMF Fiscal Affairs Department’s (FAD) 50th Anniversary Conference on December 5, 2014, Professor Ravi Kanbur of Cornell University analyzed the intellectual origins and roots of FAD.  In his view, these roots derive not from the influence of Keynes, one of the founding fathers of the IMF, who was more concerned with issues of monetary policy and balance of payments stabilization than with fiscal policy. A much stronger influence on FAD’s development was one of Keynes’ illustrious colleagues at Cambridge University, Arthur Pigou. Professor Kanbur’s main thesis [Presentation_Available here (.ppt)], however, was that FAD, while responsible for many important applications of fiscal policy, had taken little advantage of important recent work on political economy analysis, and the application of behavioral economics to fiscal issues. These developments derive from the work of notable economists such as Knut Wicksell and 2002 Nobel Prize winner Daniel Kahneman. Another strong influence has been the work on public choice theory and the economics of state bureaucracy, a line running from Pareto, through the great Italian school of public finance to the work of scholars such as Buchanan, Tullock and Peacock.

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January 27, 2015

Book Announcement: Reconstructing Iraq's Budgetary Institutions: Coalition State Building After Saddam

  Savage, J.D
Posted by James D. Savage, University of Virginia

The invasion of Iraq led to a costly nine-year state-building and reconstruction effort. Reconstructing Iraq's budgetary institutions proved to be a vital element of the state-building project, as allocating Iraq's growing oil revenues to pay salaries and pensions, build infrastructure, and provide essential public services played a key role in the Coalition's counterinsurgency strategy.  Employing a historical institutionalist approach, this book first explores the Ottoman, British, and Ba'athist origins of Iraq's budgetary institutions. The book next examines American pre-war planning, the Coalition Provisional Authority's rule making and budgeting following the invasion of Iraq in 2003, and the mixed success of the Coalition's capacity-building programs initiated throughout the occupation. The budgetary process introduced by the Coalition offered a source of institutional stability in the midst of insurgency, sectarian violence, economic uncertainty, and occupation. This book explores the problem of "outsiders" building states, contributes to a more comprehensive evaluation of the Coalition in Iraq, addresses the question of why Iraqis took ownership of some Coalition-generated institutions and not others, and helps explain the nature of institutional change.

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December 19, 2014

The Politics of Fiscal Squeeze: Book Review


Posted by Richard Allen[1]

The politics of cutting government spending or raising taxes (or both) has dominated public debate in many countries in recent years. A new era of conflict has developed, with old political alignments being tested and new battles emerging over whose expectations are to be disappointed and who should be blamed for fiscal squeeze. Do parties who cut spending always get defeated in the following election? Are there “good practice” cases that every government should follow when it has to cut spending or raise taxes to balance its public finances? Such issues have typically been analyzed from an economic or financial perspective, with a particular focus on the recent financial crisis.

An interesting recent volume of papers focuses on the politics of fiscal squeeze and takes a longer view.[2] In this respect, the commonly held assumption that the financial crash of 2008 and the dramatic policy changes that followed were unique in the history of the world is mistaken. David Heald and Christopher Hood note, for example, that the fiscal travails of the early United States in the 1840s, or the Ottoman Empire after it defaulted on its loan repayments to foreign creditors in 1875, goes beyond anything witnessed in the Eurozone countries in the 2010s.

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November 13, 2013

How Long Does it Take to Achieve Fiscal Transparency?

Posted by Tim Irwin

In many developing and emerging economies today there are demands for more fiscal transparency, to stop the misuse of public funds. How long might it take for these demands to translate into the kind of transparency achieved in countries like France, Sweden, and the United Kingdom? (The Open Budget Survey has information on fiscal transparency in these three countries and many others.) This new working paper on the history of fiscal transparency in Western Europe (see earlier blog) doesn’t aim to answer questions about developing and emerging economies, but it may provoke some thoughts on the subject.

The evidence it presents can be read in two different ways. On the one hand, there were debates about fiscal transparency in Europe two hundred years ago, which suggests that the transition from secrecy to transparency could be a long one. To illustrate, it’s perhaps worth quoting three advocates of transparency who, for reasons of space, didn’t get discussed in the working paper.

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November 06, 2013

Book Review: The International Handbook of Public Financial Management[1]

Posted by Philip Joyce and Juan Pablo Martinez Guzman[2]

PFM handbook
Over the last two decades, public financial management (PFM) has been at the core of many government reforms around the world.  As a subject with many moving parts, the field has become distinctively broad and diverse, with a great array of topics that are strongly linked with each other. For that reason, creating a comprehensive book that covers most, if not all, of the PFM related topics, is a daunting (some might say impossible) task. Richard Allen, Richard Hemming and Barry Potter, three former staff members of the Fiscal Affairs Department of the IMF, however, have managed to accomplish such an objective with the publication of the new International Handbook of Public Financial Management.  The book’s length (more than 900 pages) is itself a testament to the breadth of the field.

In addition to the broad range of topics that make this book almost inarguably the most comprehensive PFM publication to date, it is important to describe two overarching characteristics that make it unique. First, it provides an extraordinary combination of academic knowledge and empirical evidence. Thus, every topic covered is analyzed both through the lens of how ideal PFM systems should be designed and how they are to be implemented given specific country scenarios. Each chapter of the book combines evidence from developed and developing countries; emphasizing institutional arrangements, political economy constraints, and the interrelations between systems. This makes this book an excellent guide for policymakers, practitioners, and academics. Second, this book benefits from the views of the different authors, many of whom are the leading experts on the topics covered by the many chapters. Readers will benefit greatly not just from learning about the topics, but by learning about them from these world-reckoned experts.

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October 29, 2013

History of Fiscal Transparency and Fiscal Secrecy

Posted by Tim Irwin

Working paper logo
What encourages governments to publish information about their finances? A new IMF working paper, “Revealing the Mysteries of State: The Origins of Fiscal Transparency in Western Europe” aims to shed light on this question by examining the history of European fiscal transparency. It was inspired by the Fund’s work on promoting fiscal transparency (see this policy paper and the new draft Fiscal Transparency Code).

The working paper looks back as far as Athens in the fifth-century BC and notes a few of the developments of the last two decades, but it concentrates on the fiscal secrecy of the age of absolutism, in which governments used spies to uncover the accounts of other states, and on the efforts of eighteenth- and nineteenth-century reformers to get the accounts published.

One factor encouraging transparency identified by the paper is the strength of governments’ need to raise money from skeptical lenders and taxpayers. Its influence can be seen at work on many occasions, including medieval Spain and seventeenth-century England, but it was particularly evident during the French Revolution.

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August 03, 2013

PPPs on the Balance Sheet, Please!

Posted by Tim Irwin

Public-private partnerships create a practical problem for public financial management, because their fiscal costs are deferred. Instead of paying for a project during its construction, the government starts to pay only when construction is complete, which may be four or five years after any deal is signed. That means that the main tool of public financial management—budget scrutiny—can’t be used to ensure that PPPs are affordable and a better use of public money than the alternatives. For PPPs with long construction periods, even the analysis of medium-term spending plans doesn’t help.

So what can be done to ensure that the budgetary implications of PPPs are properly considered?

The World Bank Group has just published an Operational Note on managing fiscal commitments from PPPs that helps answer this question. It looks at how these fiscal commitments can be assessed and monitored, whether they are commitments to pay for the availability of a service or to protect a PPP company from certain risks. The Note gives examples of the tasks that can be carried out by different government agencies, such as budget departments, debt-management offices, and PPP units. And it considers the kinds of rules that can be put in legislation to help ensure that the right assessment and monitoring occurs.

However, the Operational Note does not take a position on whether or not PPPs should be put on the government’s balance sheet. Budgeting and Reporting for Public-Private Partnerships by Katja Funke, Isabel Rial, and me argues that they typically should be.

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June 14, 2013

Time to Overhaul PFM in the UK?

Posted by Tom Josephs

Should the public sector aim to follow the approach to financial control used in the private sector?  In 2011 the UK government took a step in this direction by publishing the first Whole of Government Accounts (WGA) which consolidate the financial accounts of over 1,500 organizations across the public sector on a similar basis to commercial accounting.  Two recent papers[1] suggest that the UK government should build on this initiative—following the introduction of accrual-based accounting and budgeting ten years earlier—by developing better financial control structures which mirror those used in the private sector. The ideas put forward provide a useful contribution to this debate.

WGA is based on the system of accounts used internationally by the private sector, adapted where appropriate for the public sector, and uses a similar presentation to private sector accounts. It is the first time a consolidated set of accounts has been published for the UK public sector. Because it follows commercial accounting practices it should open up the public sector finances to wider external scrutiny by accounting professionals. While WGA’s contribution to increased transparency has been widely recognized it has yet to find a role in policy-making.  Partly this reflects the fact that it is a relatively new innovation. It is unfamiliar to policy-makers and there is no historical series and few international comparators against which to benchmark the current position.  There are significant differences between the key measures of the public sector deficit and net liability position found in WGA compared to the equivalent National Accounts measures produced by the UK’s national statistical agency which are currently used in fiscal policy-making.

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May 10, 2013

Latest Issue of International Journal of Governmental Financial Management Published

Posted by Andy Wynne

The latest issue of the International Journal of Governmental Financial Management was recently published and is now available for free download

We begin this issue of our Journal with an examination of key public financial management (PFM) reform measures undertaken in India in the recent past and suggestions to enhance the effectiveness of the PFM systems involved involved. In recent years the role of sound PFM systems in achieving the objectives of fiscal discipline, strategic planning and improved service delivery has been receiving increased public attention in India. PFM reforms undertaken intermittently over the years have, however, not delivered the anticipated results in these areas. Studies and recommendations of government appointed committees and expert bodies have identified gaps that need attention to strengthen the institutional framework and to improve the efficiency of government spending.

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April 18, 2013

Managing Public Finances Is Vital to Economic Prosperity

As posted on IMF Survey Online

Across the world many countries are now grappling with restoring sound and sustainable public finances: the way governments manage their budgets today will have profound economic effects in the years ahead. A new book by the IMF looks at reforms introduced by governments over the past two decades to improve management of public finances. These innovative ideas and reforms are changing the landscape of public finances and eventually aim to fundamentally change the way governments manage the public’s money.

The global financial and economic crisis highlighted the importance of sound public financial management in ensuring that well-designed fiscal policies are implemented effectively. Sound management of public finances means maintaining a sustainable fiscal position, allocating resources efficiently, and delivering public goods and services effectively.

The book looks at how reforms to public financial management make use of new information, processes, and rules to change the behavior of politicians and public servants to counter the ongoing challenges of managing government’s money. As identified in the book, too often the tendency for policy makers is to spend rather than save in good times; to focus on the short term; and to ignore the future costs of new policies, underlying fiscal risk, and the true state of public finances.

“The global crisis has highlighted that reforming governments’ management of public finances is no longer an option but a necessity. There is no ‘one-size-fits-all’ solution—reforms need to be tailored to countries’ individual circumstances,” said IMF Deputy Managing Director, Min Zhu, who addressed officials, journalists, and academics gathered at a special seminar to discuss the findings in the book.

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April 05, 2013

Turkey’s Successful Modernization of Treasury Operations

 Posted by Yasemin Hurcan[1]

Turkey book
In ten years that followed the 2001 economic crisis in the country, Turkey managed to halve its debt to GDP ratio. As a result, Turkey was selected as a benchmark country for debt reduction in the World Bank’s 2012 report “Golden Growth: Restoring the Lustre of the European Economic Model”. A recently published book[2] entitled “Treasury Operations in Turkey and Contemporary Sovereign Treasury Management” discusses how the Turkish Treasury managed to decrease its debt by, amongst other things, restructuring the Treasury’s operations and management. The publication is available as an e-book.

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March 22, 2013

Public Financial Management and Its Emerging Architecture

Public financial management (PFM)—the fine art of budgeting, spending, and managing public monies—has seen an influx of innovations and reforms over the last two decades.

This book poses critical questions about these reforms, which include fiscal rules, fiscal responsibility legislation, medium-term budget frameworks, fiscal councils, performance budgeting, and accrual accounting. The authors evaluate what these reforms have accomplished and the issues and challenges that have been encountered, including those from the global financial and economic crisis. It draws lessons to help guide reformers in their pursuit of the next generation of PFM reforms. Public Financial Management and Its Emerging Architecture is available in print and e-book formats.

This event is open to the public, and those wishing to attend are asked to RSVP by sending an e-mail to with the following details: full name, affiliation or employer name, and daytime phone number. Please RSVP by 3:00 p.m. on April 10. IMF and World Bank personnel are also welcome, and they need only their ID cards to enter.

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February 08, 2013

New FAD Technical Note and Manual: Cash Management and the Relationship Between Treasury and Central Bank

Posted by Renaud Duplay

Cash management is one of the main issues when reforming PFM systems in developing countries. Bad cash management is costly because it hampers budget execution, causes arrears and increases funding costs. For this reason the Fiscal Affairs Department (FAD) has already released two Technical Notes and Manuals (TNMs) on this subject and is now releasing further guidance material. A new TNM, prepared by Mario Pessoa and Mike Williams, expands the review of cash management issues by specifically addressing the relationship between the treasury and the central bank.  

The note was prepared at the request of the Latin American Treasurers' Forum (FOTEGAL) and addresses both institutional and technical issues and is particularly relevant to developing countries. Based on international experience, the TNM describes the modern framework of a formalized relationship between both institutions standing on two key principles:

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October 15, 2012

What Lies Beneath: Issues in Debt Statistics

Posted by Robert Dippelsman

Most key macroeconomic indicators such as GDP, the consumer price index (CPI), data on monetary aggregates, or balance of payments follow internationally accepted definitions. In contrast, public debt data can have different meanings. This problem is discussed in the recently released Staff Discussion Note What Lies Beneath: Statistical Definitions of Public Debt by Robert Dippelsman, Claudia Dziobek, and Carlos Gutiérrez Mangas of the IMF Statistics Department.  

The discussion note shows that the failure to adopt global standards can lead to important misunderstandings because of the potentially large magnitudes involved. However, international guidelines on the compilation of public sector debt are well established and set out in the recently published Public Sector Debt Statistics Guide: Guide for Compilers and Users (Debt Guide). The note identifies some key dimensions of public sector debt that need to be considered:

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September 26, 2012

New FAD Brochure Explains It All

Posted by the Fiscal Affairs Department of the IMF

The casual reader of the PFM Blog may have wondered what part of the IMF is actually responsible for the posts on this website. The website is maintained by the two PFM Divisions in the Fiscal Affairs Department (FAD), one of the functional (in contrast to geographic) departments of the IMF. For the upcoming Annual Meetings of IMF and World Bank Group in Tokyo from October 9-14 the attached brochure has been produced. It should be clear that FAD is much more than PFM alone! 

Download FAD Brochure 2012

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September 20, 2012

Government Accounting Tricks Designed to Conceal Rather Than Reveal

Posted by Tim Irwin

Working paper logo
It’s well known that governments sometimes use accounting devices to make their reported deficits smaller than, in some sense, they really are. But how do these devices work? And how can they be revealed?  A new IMF working paper by FAD’s Tim Irwin—Some Algebra of Fiscal Transparency: How Accounting Devices Work and How to Reveal Them—discusses these issues.  

One way to answer the questions is to consider future deficits. Deficit devices, unlike genuine changes in fiscal policy, reduce this year’s deficit only at the expense of future ones. And their use can therefore be revealed if governments also produce good fiscal forecasts.

This paper takes a different approach. It starts by defining the deficit as the decline in the government’s net worth and then shows how deficit devices can be analyzed as transactions involving assets and liabilities that are not recognized on the government’s balance sheet. For example, many governments do not include nonfinancial assets such as land and buildings on their balance sheets, so they can reduce their reported deficit by selling these assets, even though this doesn’t really improve their finances. It would seem, then, that accounting devices can be prevented by ensuring that all assets and liabilities are recognized on the balance sheet.

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September 18, 2012

“IPSAS Explained” – Second Edition [1]

Posted by Delphine Moretti

The recent publication of the second edition of “IPSAS Explained” is good news for readers who do not have time to plough through the two volumes and daunting 1,500 pages of the International Public Sector Accounting Standards (IPSAS) Board’s Handbook. The book is written by Thomas Mueller-Marques Berger who is himself a member of the IPSAS Board.

The main asset of the book is its very clear and concise presentation of the standards, which, as the author notes in his foreword, are “sometimes complex and inapprehensible”, especially to non-accountants. As was the case with the first edition, the new book fully succeeds in providing the reader with essential information – compressed into 5-10 pages - about each of the 32 standards. For this we are indebted to the author’s comprehensive knowledge and understanding of the field. For each standard, a brief chapter describes factually the objective of the standard, the international financial reporting standard (IFRS) on which it is based, together with an assessment of its scope and content, definitions used, relevant accounting rules and principles, and application date. The coverage of existing and recently published standards and exposure drafts includes a section on the much awaited IPSAS 32 “Service concession arrangements: grantor” together with a discussion of the exposure draft on reporting the long-term sustainability of finances of public sector entities. A third edition of the volume is to be expected as the on-going process of aligning the IPSAS with their IFRS counterparts should bring further changes to the IPSAS framework very soon, and some major additions to the framework are scheduled in the years ahead.

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July 06, 2012

Latest Issue of the International Journal of Governmental Financial Management

Posted by Andy Wynne –

The latest issue of the International Journal of Governmental Financial Management is now available for free down load from:

This issue of the Journal begins with An Overview of Accounting in the Nigerian Public Sector which is the first chapter of a recent book by two eminent Nigerian authors, Eddy O. Omolehinwa and J. K. Naiyeju. This paper reviews the differences between public sector accounting and that undertaken in the private sector. It then discusses the different types of public sector organisation and the approaches to public sector accounting which have been developed for each of these institutions. Finally the authors consider the research challenges in the area of public sector accounting. They note that the most important has been access to data, but that this has improved in recent years with the annual and even quarterly financial statements now being made available for the Nigerian public sector on the Internet.

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June 08, 2012

Accounting and the Budget Framework

Posted by Julie Cooper

For decades the debate has raged on about the applicability for government of what is often referred to as private sector accounting methodology.  Those who argue against its use in government offer up the differences in management focus between the private and public sectors to support their position. They argue that because the private sector is focused on profit generation the underlying concepts of accounting are not valid for government purposes. This argument is simplistic and fails to recognize the overarching purpose of all accounting systems.

Accounting is an information and measurement system that identifies, records, and communicates relevant, reliable, and comparable information about an organization’s activities. Providing information about how an organization performs is an important aim of accounting. This is true for both private and public sectors. Another similarity between the two sectors is that they both focus on the efficient allocation of resources to realize their goals. The difference between these two sectors lay in how that information is reported and used not the accounting per se.

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June 04, 2012

Transición a la contabilidad en base de devengo: Notas Técnicas y Manuales del FMI

Publicada por Abdul Khan

La contabilidad en base de devengo es un tema candente en la actualidad, y muchos países han manifestado interés en adoptar este tipo de régimen contable. En una Nota Técnica de septiembre de 2009 elaborada por Abdul Khan, del Departamento de Finanzas Públicas del FMI, y por Stephen Mayes, ex funcionario de la institución, se presentan recomendaciones sobre el diseño, la planificación y la implementación de un régimen de contabilidad en base de devengo. La Nota aborda una serie de cuestiones relacionadas con la implementación de la contabilidad en base de devengo, y tiene por objeto establecer las pautas generales sobre las condiciones previas necesarias para una transición exitosa a la contabilidad en base de devengo, la secuencia adecuada de las medidas de reforma y los hitos que podrían servir como indicadores de los avances.

Las directrices de la Nota están concebidas para su aplicación principalmente en departamentos y unidades del gobierno general dentro de jurisdicciones nacionales, provinciales/estatales y locales. Se supone que las empresas estatales que participan en actividades comerciales ya preparan los presupuestos, llevan su contabilidad y presentan informes en base de devengo completo.

Haga clic aquí para descargar el texto íntegro de la nota en inglés o español

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June 01, 2012

Les budgets nationaux au service du développement et de la réduction de la pauvreté

Posté par Mohamed Moindze

Se voulant résolument pragmatique et orienté vers les nouvelles finances publiques, l’ouvrage «Les budgets nationaux au service du développement et de la réduction de la pauvreté »  édité, en janvier 2012, est centré sur la budgétisation des politiques de développement et de réduction de la pauvreté dans les pays en développement de tradition francophone.

L’ouvrage se veut également exhaustif en proposant une vision d’ensemble des questions relatives à l’élaboration des budgets nationaux basés sur les politiques publiques. Il est composé de deux parties. La première traite des stratégies globales et sectorielles dans leurs différents aspects de diagnostic, d’élaboration, de costing et de suivi en se basant sur les stratégies de croissance et  de réduction de la pauvreté développées par les pays en développant.

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National Budgets that Meet the Needs of Development and Poverty Reduction

Posted by Mohamed Moindze

With its resolutely pragmatic focus on the latest developments in public finance, Les budgets nationaux au service du développement et de la réduction de la pauvreté [National budgets that meet the needs of development and poverty reduction] (published in January 2012) addresses the budgeting of development and poverty-reduction policies in developing Francophone countries.

This publication also provides a comprehensive overview of issues relevant to preparing national budgets based on public policies. The text comes in two parts. The first part deals with the various aspects of global and sectoral strategies (diagnostic assessment, preparation, costing, and monitoring), predicated on the growth and poverty-reduction strategies formulated by developing countries.

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May 29, 2012

What Role for Sovereign Credit Ratings in Public Financial Management?

Posted by Tim Irwin

Working paper logo
Though intended for other purposes, sovereign credit ratings arguably have a role to play in public financial management. In particular, they provide an independent assessment of the strength of public finances that quickly allows citizens, journalists, members of parliament, and others to judge the financial risks being run by their government. Unlike many other sources of information on public finances, credit ratings are summarized in a grade, which makes them easy to understand. And, partly because grades allow countries to be ranked, they attract much more attention than, say, a fiscal ROSC.

They are controversial, because they not only inform investors but are deeply embedded in rules and regulations. A government’s credit rating can now determine whether its bonds can be bought by some investors, whether they are included in indices that other investors track, and whether they are accepted as collateral by central banks. It can determine how much capital banks have to set aside to cover possible losses on the government’s debt and whether investment banks will contract with the government or keep credit lines and derivative contracts open. So a downgrade can limit the government’s funding options, increase the interest rates it must pay, prevent it from hedging risks, and trigger sudden payment demands.

They are also controversial because their accuracy is sometimes questionable. At the onset of the global financial crisis, credit-rating rating agencies were rightly criticized for having underestimated the risks presented by securitized mortgages. Problems in sovereign ratings are less stark, but the Greek government had good ratings not long before it got into trouble, and the Japanese government has paid extremely low interest rates for years—suggesting that investors consider it very creditworthy—even though its ratings are not the highest.

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May 16, 2012

IMF Weighs in on Health Care Reform

Previously published on IMF Survey

Health care book

Economies the world over will be hit with rising health care costs at a time when many of them need to undertake large fiscal adjustments to reduce deficits and debt.

According to IMF analysis released earlier this week, reforming health care systems should be high on the list of priorities of governments as they continue to work on cutting deficits and debt.

Health care costs have skyrocketed over the past few decades with the introduction of new and very expensive technologies to treat patients. Aging populations are also contributing to cost increases.

Faced with uncertainty regarding longer-term recovery prospects for the global economy, governments may soon be in a difficult spot if they fail to make the necessary reforms to health care systems.

“We enjoy a higher quality of health care today, but we have to find a way to finance it,” said IMF Deputy Managing Director Min Zhu. Zhu addressed officials, journalists, and academics gathered at a special seminar to discuss the findings in a new book The Economics of Public Health Care Reform in Advanced and Emerging Economies.

“This new book brings forward a lot of the challenges we face today. Across the world, countries are seeing aging populations, rising costs of health care, or both. We have to take action today in a clear, strong, determined way on a global basis to address these issues,” said Zhu.

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April 04, 2012

La Cuenta Única de Tesorería es una herramienta esencial para la gestión de tesorería del gobierno: Nueva nota técnica del Departamento de Finanzas Públicas

Publicado por Sailendra Pattanayak

La cuenta única de tesorería (CUT) es un prerrequisito esencial para una gestión de caja eficaz y es una herramienta clave que permite al ministerio de hacienda o de finanzas establecer la supervisión y el control centralizado de los recursos  de tesorería del gobierno. También proporciona otros beneficios y, por ende, mejora la eficacia global del sistema de gestión financiera pública (GFP). En particular, la CUT facilita una mejor coordinación fiscal, de la gestión de la deuda y de la política monetaria, así como una mejor conciliación de los datos fiscales y bancarios, lo que a su vez mejora la calidad de la información fiscal. El establecimiento de la CUT reduce considerablemente los costos del servicio de la deuda pública, las necesidades de reservas líquidas, y ayuda a maximizar el rendimiento de las inversiones del excedente de efectivo.

El Departamento de Finanzas Públicas del FMI ha publicado recientemente una nueva nota técnica de la serie Notas Técnicas y Manuales  titulada La Cuenta Única de Tesorería: Una herramienta esencial para la gestión de tesorería del gobierno. Esta nota se basa en gran medida en el anterior documento de trabajo del FMI “Treasury Single Account: Concept, Design and Implementation Issues”, preparado por Israel Fainboim y por mí,[1] y publicado en el blog PFM el 12 de julio de 2010. En la nota se examinan las principales características de la CUT, posibles estructuras alternativas de la CUT y los sistemas de procesamiento de transacciones correspondientes, así como varias cuestiones relativas al diseño y a las condiciones previas que deberían abordarse para establecer un sistema de CUT. Además, se explican los principales pasos que deberían seguirse para implementar la CUT y se proporcionan directrices prácticas sobre la contabilidad y la presentación de informes en un régimen de CUT, conciliación bancaria y acuerdos con los bancos sobre los servicios para la gestión de la CUT.

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February 16, 2012

Modernización de la gestión de caja

Juan Ramón Ruiz

TNM_09_03_SPA_web (2) Lienert 1
¿Cuáles son los principales objetivos de una gestión de caja moderna? ¿Cuáles son las buenas prácticas de gestión de caja en los países desarrollados? ¿Cuáles son las características principales del marco para la planificación de caja a corto plazo? ¿Cuáles son los principales desafíos que se deben abordar para mejorar la gestión de caja en los países de ingreso bajo y mediano? ¿Qué secuencia deberían seguir las reformas de la gestión de caja?

Estas son las preguntas que responde la Nota Técnica elaborada por Ian Lienert. Esta Nota indica que una gestión de caja eficaz contribuye al cumplimiento ordenado de las metas operativas de la política fiscal, la estrategia de gestión de la deuda pública y la política monetaria. Los cuatro objetivos principales de una gestión de caja moderna son: (1) garantizar que se disponga de fondos en efectivo suficientes para pagar los gastos en el momento de su vencimiento; (2) obtener préstamos sólo cuando sea necesario y minimizar los costos del endeudamiento público; (3) maximizar el rendimiento de los saldos de caja inactivos, y; (4) gestionar los riesgos, invirtiendo los excedentes temporales de manera productiva y con garantías adecuadas.

La Nota Técnica distingue nueve características importantes que pueden observarse en  la gestión de caja moderna y eficaz en los países avanzados de la Organización para la Cooperación y Desarrollo Económico (OCDE), de las cuales seis de ellas tienen carácter fundamental, y otras tres son recomendadas. Entre ellas tiene especial importancia la centralización de los saldos de caja del gobierno, estableciendo un sistema de Cuenta Única de Tesorería (CUT).

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December 19, 2011

New Flyer on "Government Finance Statistics: Cash and Accrual Data"

Posted by Claudia Dziobek and Phebby Kufa, Statistics Department, IMF

A state-of-the-art fiscal data presentation should follow a balance sheet approach similar to the private sector accounting. The main principles are laid out in the Government Finance Statistics Manual 2001 (GFSM 2001). Some policy makers and fiscal analysts assume incorrectly that theGFSM 2001 requires onlythe accrual-recorded data, which may imply substantial reform of the fiscal reporting and government accounting system.

This assumption is only partially true. The GFSM 2001 in fact requires both, cash and accrual-based data. The misconception has contributed to delays in phasing-in the GFSM 2001 framework for various purposes e.g. budgeting, auditing, or macroeconomic analysis.

A new flyer on Government Finance Statistics: Cash and Accrual Data was prepared to address this misconception. It explains why both the cash-recorded and accrual-recorded data are needed for fiscal management. Cash-recorded data are used to produce a cash flow statement, which explains changes in the stock of cash and deposits, helps control payments, and determines the cash-financing gap. Accrual-recorded data are presented in an operation statement, which links in with the balance sheet. These accrual-based data better capture economic events and are needed for macroeconomic analysis.

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December 05, 2011

Treasury Single Account is an Essential Tool for Government Cash Management – A New FAD Technical Note & Manual

Posted by Sailendra Pattanayak

A treasury single account (TSA) is a prerequisite for effective cash management and is a key tool for the ministry of finance/treasury to establish oversight and centralized control over government’s cash resources. It also provides a number of other benefits and thereby enhances the overall effectiveness of a public financial management (PFM) system. In particular, a TSA facilitates better fiscal, debt management, and monetary policy coordination as well as better reconciliation of fiscal and banking data, which in turn improves the quality of fiscal information. The establishment of a TSA significantly reduces the government debt servicing costs, lowers liquidity reserve needs, and helps maximize the return on investments of surplus cash.

A new Technical Note and Manual (TNM) entitled “Treasury Single Account: An Essential Tool for Government Cash Management” has recently been published by the IMF Fiscal Affairs Department (FAD). This TNM is largely based on the previous IMF working paper “Treasury Single Account: Concept, Design and Implementation Issues,” authored by Israel Fainboim and myself,[1] and published on the PFM blog on July 12, 2010. The TNM discusses the main features of a TSA, alternative TSA structures and associated transaction processing systems, and various design issues and preconditions that need to be addressed for setting up a TSA system. In addition, it explains the key sequential steps for implementing a TSA and provides practical tips on accounting and reporting under a TSA regime, bank reconciliation, and service level agreements with banks for TSA operation.

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November 25, 2011

A Usually Neglected But Quite Critical Topic for Modern State Treasuries: Operational Risk Management and Business Continuity Planning

Posted by Israel Fainboim

A new Technical Note and Manual (TNM 11/05) has been published by the Fiscal Affairs Department on a topic that is of utmost importance to treasuries and ministries of finance but usually neglected: operational risk management (ORM) and business continuity (including disaster recovery) planning. The author is Ian Storkey, a well known international expert on treasury and debt management, including ORM.

This TNM should have a profound effect on how treasuries operate. Developing an ORM framework and a BCP/DRP should become a priority for treasuries and ministries of finance (MoFs). Why is this? As Ian Storkey mentions, for the simple but very important reason that they are responsible for managing very substantial government assets and liabilities and handling many large value transactions and as a consequence any risk exposure can have damaging fiscal effects and in addition generate severe reputational and political damage. Operational risks[1] are one category of risks that can produce these effects (as other risks can do as well). Operational risks are usually defined as “the risk of loss resulting from inadequate or failed internal processes, people and systems or from external events.”[2]

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November 09, 2011

Point of View: GFS out of the 'Bat House'

Posted by Alberto Jimenez de Lucio, Statistics Department, IMF

Inspiration can come in the most unexpected moments, writes STA’s Alberto Jimenez de Lucio, who came up with a do-it-yourself guide to compiling financial statistics for government officials.

My eureka moment occurred two years ago. I had just finished assembling a bat house that actually looked like the picture in the box it came in; a minor accomplishment for any handyman, but a major achievement for someone who has difficulty changing light bulbs. What had made this outcome possible? The answer was a step by step, illustrated, assembly instructions sheet.

Could this approach work for helping member countries compile government accounts in accordance with international standards? Thus began the idea of writing a Government Finance Statistics (GFS) Compilation Guide for Developing Countries.

Next order of business was to find the resources to carry out the idea. The possibility arose a few months later while discussing the next phase of a DFID project for improving macroeconomic statistics in Anglophone Africa. After some negotiations, agreement was reached on drafting a “how to” compile GFS guide tailored to the specific issues faced by developing countries as part of the project (Enhanced Data Dissemination Initiative). Now we had the funding and were committed to writing the guide. 

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October 03, 2011

Budget Institutions Supporting Fiscal Consolidation

Posted by David Nummy

Countries around the world are struggling to devise the policies that will best address the challenges resulting from the financial crisis. In a book to be issued by the Fiscal Affairs Department of the International Monetary Fund, the case is made that key budget institutions will be necessary to both devise and execute those policies.

Previewing the book that will be issued later this year, Marco Cangiano kicked off the International Consortium on Governmental Financial Management (ICGFM) fall season by presenting on Budget Institutions for the 21st Century at the monthly DC Forum held at the Carnegie Endowment for Peace in Washington, DC on September 7, 2011. Mr. Cangiano, an Assistant Director of the IMF Fiscal Affairs Department, outlined ten budget institutions that will be key to countries around the world in addressing the challenges of dealing with the post-financial crisis environment in the three typical phases of a fiscal consolidation (but the same would apply in designing a stimulus package): understanding the fiscal challenge; developing a strategy; and implementation of the strategy though the budget process.

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September 23, 2011

Promotional Video for "Chipping Away at Public Debt—What Failed and What Worked in Past Attempts at Fiscal Adjustment"

In our July 25 blog post, Mauricio Villafuerte presented a new book from the IMF’s Fiscal Affairs Department (FAD): Chipping Away at Public Debt—Sources of Failure and Keys to Success in Fiscal Adjustment, edited by Paolo Mauro, with a foreword by FAD’s Director, Carlo Cottarelli; published by Wiley; available in hardback and e-book.

A promotional video for the book is now available:

Note: The posts on the IMF PFM Blog should not be reported as representing the views of the IMF. The views expressed are those of the authors and do not necessarily represent those of the IMF or IMF policy.

September 09, 2011

Evaluation of Governance: A Study of the Government of India’s Outcome Budget

Posted by Anand P. Gupta, Director, Economic Management Institute, New Delhi, India. E-mail:

In 2005, the Government of India launched an apparently excellent initiative – the Outcome Budget – with the objective of changing the culture of measuring performance in terms of the amount of money spent against the budgeted allocations, to one of measuring performance in terms of the delivery of the outcomes that people are concerned with. This paper describes how the Outcome Budget was launched, articulates the theory of change underlying the Outcome Budget, presents a case study of the Outcome Budget of the Government of India’s Accelerated Power Development and Reforms Programme, and discusses the lessons that the Government of India may learn from its experience with the Outcome Budget.

The paper argues that the Outcome Budget has failed. This has happened because the assumptions of the theory of change underlying the Outcome Budget have not been satisfied. The failure of the Outcome Budget has extremely important lessons for the Independent Evaluation Office, which the Government of India has decided to set up. The paper articulates the theory of change underlying the Independent Evaluation Office. This theory assumes that policymakers in India currently demand rigorous impact evaluations of public interventions and will continue to demand such evaluations in future, not because they have to comply with any requirement but because they really want to know the answers to the impact evaluation questions of ‘what works, under what conditions does it work, for whom, what part of a given intervention works, and for how much?’, so that they may draw appropriate lessons from these answers and use these lessons while designing and implementing public interventions in future.  However, given Indian public officials’ current culture, the Independent Evaluation Office may not make any visible difference in development effectiveness in India.

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September 07, 2011

Phil Joyce's Seminar with FAD on His Book: The Congressional Budget Office

Posted by Kris Kauffmann

On August 30, 2011, the Fiscal Affairs Department (FAD) of the IMF had the pleasure to host Phil Joyce for a seminar regarding his book, The Congressional Budget Office – Honest Numbers, Power and Policymaking.

The book charts the history of the CBO and its engagement in key areas of policy development in the United States over the last 37 years. A key aspect of the emergence of CBO explored in the book is the manner in which the leaders of the CBO have shaped the institution. In his presentation Phil explained that the CBO has maintained a reputation as a non-partisan organization while serving in the highly politically charged environment of Congress largely due to the professionalism of successive leaders and the staff of CBO and their consistent desire to ensure a non-partisan approach in CBO irrespective of any notional affiliations.  

Phil outlined the structure and working approach of the CBO, including the manner in which it engages with members of Congress, committees, the OMB and other entities in the executive branch, as well as its external outreach.

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August 18, 2011

Certifying PFM Systems for Donor Budget Support to Fragile States – Professor Collier’s Proposal

Posted by Tej Prakash

In a recent op-ed (later also presented at an Overseas Development Institute (ODI) meeting), Prof. Paul Collier has put forward the argument that where donor aid is allowed to flow through the budget system of a fragile state, it has largely failed to deliver the results promised. The reasons given for this failure, range from incompetence to corruption. And, it is suggested that in the near future, there seems to be little chance of any meaningful improvement in these outcomes. He argues that the governance system in many of these countries is broken, and its focus is by no means primarily to provide services to the citizens. It is suggested that budget systems of these countries are extremely ‘leaky’ (‘looting of the public purse”) and that donors do not have, by and large, either the information or the technical expertise, to prevent misuse of aid money.

Collier makes a distinction between aid given for critical operations and for more general budget support operations. For critical operations he recommends using ‘imported administrative capacity’ to manage all spending, including donor funds through specific project support arrangements. His proposal relates only to donor budget support and does not address existing parallel project based arrangements operated by many donors. He does suggest that it is possible to improve the ‘technical’ aspects of donor flows. The focus of technical improvements would not be to introduce policy ‘conditionalities’ through a back door, but to enforce the country’s own laws. He cites the insight of Tinbergen that to implement any objective, there should be a distinct instrument with its distinct effect. Hence, the two main objectives: meeting the need for funds (how much) and ensuring their effective use (on what), should be managed by two different instruments.

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August 02, 2011

An Interview with Vito Tanzi

 Tanzi new large

Posted by Carla Sateriale

Vito Tanzi was director of the IMF Fiscal Affairs Department for 20 years, from 1981 to 2000. Since then he has served as Senior Associate at the Carnegie Endowment for International Peace, Undersecretary for Economy and Finance in the Italian government, and consultant and scholar to various international institutions and research institutes. Since his retirement from the Fund he has authored 11 books. Last week Mr. Tanzi’s latest book, Government versus Markets: The Changing Economic Role of the State, was presented at IMF headquarters in Washington. FAD research assistant Carla Sateriale interviewed Mr. Tanzi on his new publication.      


What inspired you to write this new book, Government versus Markets, at this point in your career?

I’ve had at least three, maybe four careers throughout my life, which have shaped my perspective. I started in academia—studying at Harvard, and then teaching at American University and George Washington University. I spent 27 years at the Fund, then two years as a minister in the Italian government, and then several more years as a researcher and scholar at the Carnegie Endowment and at the Inter-American Development Bank. Finally, I decided to do what I had always wanted—have a period of my life with no formal commitments. I wanted to allocate all my time to reading, research, and writing. In many ways it has been the most productive period of my life. I have been able to publish five books between last year and now. Two of them in particular, The Charm of Latin America and Russian Bears and Somali Sharks, allowed me to weave together my perspectives on economics with my concrete experiences. Government Versus Markets gave me the opportunity to combine my observations on fiscal policy and regulation with my interest in the historical evolution of the role of the state.

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July 25, 2011

Chipping Away at Public Debt—What Failed and What Worked in Past Attempts at Fiscal Adjustment

Posted by Mauricio Villafuerte

“A plan is nothing, but planning is everything.”  U.S. President Dwight Eisenhower (1957)

Until recently, developments in public debt and deficits were seldom the stuff of high drama in the world’s advanced economies. However, things have changed dramatically in the aftermath of the “Great Recession” of 2008–09. Public debt and deficits have skyrocketed. Intense negotiations between parties with different views on how to restore public finances to sustainability make front-page news in several of the largest countries on a daily basis. Investors’ concerns about fiscal sustainability in some advanced economies are reflected in major increases in funding costs. Thus, the design and implementation of credible fiscal adjustment plans in advanced economies is critical now and will remain so for many years to come.

Although the fiscal challenges facing policymakers today are greater than in the past, there is much to be learned from previous experience with large fiscal adjustment plans, including both those that achieved their objectives and those that ended up wide of the mark. This motivates a new book from the IMF’s Fiscal Affairs Department (FAD): Chipping Away at Public Debt—Sources of Failure and Keys to Success in Fiscal Adjustment, edited by Paolo Mauro, with a foreword by FAD’s Director, Carlo Cottarelli; published by Wiley; available in hardback and e-book.

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July 13, 2011

The First 2011 Issue of the International Journal of Governmental Financial Management Is Now Available for Free Download

Posted by Andy Wynne, Editor

In the first paper of this issue, David Hall makes the case for public spending. He notes the long-term steady rise in public spending in all countries and demonstrates a powerful link between public spending and economic and social development. Public spending, he argues is essential for financing infrastructure, including roads, electricity, and water. It provides the health and education services necessary for modern economies more efficiently and effectively than the market ever can. By redistributing money to those on low incomes, public spending redresses the inequality of income created by the market. Three-quarters of the global effort to counter climate change will come from public finance. As a result, David Hall argues, globally, public spending is virtually certain to continue rising, as the role of the state continues to grow in developing countries.

In the second paper, Harika Masud reviews the findings from the Open Budget Survey, 2010. This is the third biennial international survey undertaken by the Open Budget Partnership. The survey confirms that the overall state of budget transparency around the world is poor. However, it also finds that budget transparency is on a positive trajectory. To support this development, the Open Budget Partnership is developing global norms on budget transparency and participation to establish the following three guarantees:

  • public access to information on budget processes, policies, and results;
  • opportunities to participate meaningfully in the budget process; and
  • domestic and international implementation mechanisms.

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